It will be noticed that the aggregate debt has been reduced during the fiscal year ending September 30th, 1867, $3,385,400, an encouraging indication that we have at length reached the turning point, and that with a wise and prudent economy in appropriations for new objects, the time is not far distant when capital and labor can be relieved from the burthen of excessive taxation, and the annual contributions limited to what may be required for the support of government.

The following statement shows the amount of the State debt on the 30th of September, 1867, after deducting the unapplied balances of the Sinking Fund at that date.

The State has no unfunded or floating debt, all liquidated claims being provided for in the annual appropriation bills, and paid from the proceeds of the taxes levied to meet them.

GENERAL FUND DEBT.

The General Fund Debt has not changed in amount since the date of the previous report, no part of the stocks by which it is represented having become due, and the annual contribution of $350,000 from the surplus revenues of the canals not being much in excess of the annual sum required for the payment of interest. Such portions of the debt as have matured since the adoption of the constitution of 1846, have been either extended by deficiency loans under the act of 1848, or paid by advances from the treasury. The sums thus furnished or advanced, are chargeable on the General Fund Debt Sinking Fund, to be paid whenever the condition of the Fund will admit of it. There will be due of the principal of the General Fund Debt on the 1st of January, 1868, $500,000, and on the 1st of May following, $442,961.05, in all, $942,961.05. Provision has already been made to pay the amount due in January,

* Includes $350,000 received since the close of the fiscal year.

† Deducting interest accrued to October 1st, 1867, payable January 1st, 1868.

and the whole debt will be paid or provided for, at or before the close of the fiscal year ending September 30th, 1873, by an increase in the annual contribution from the canal revenues to the General Fund Debt Sinking Fund from $350,000 to $1,500,000, which may be confidently anticipated after 1868.

The following statement gives the items of the General Fund Debt on the 30th of September, 1867, and they are presented more in detail in the tables of the appendix accompanying this report:

Astor stock, chap. 302, Laws of 1827, and 86 of Laws of 1832......
Deficiency loans under chap. 216, Laws of 1848

$561,500 00 4,880,848 82

71,578 53

122,694 87

6,000 00

The principal of the debt is payable as follows:

$5,642,622 22

GENERAL FUND DEBT SINKING FUND.

The following statement gives the receipts and payments on account of the General Fund Debt Sinking Fund for the fiscal year ending September 30, 1867:

The General Fund Debt Sinking Fund was established for the purpose of providing the means for the payment of the interest and the extinguishment of the principal of the General Fund Debt. The annual contribution to the Fund from the surplus revenues of the canals has so far, however, been limited to $350,000, set apart under section two of article seven of the Constitution, a sum not much exceeding the annual interest charge on the debt. On the payment of the canal debt of 1846, which will be paid or provided for at the close of the fiscal year ending September 30, 1868, the contribution will be increased to $1,500,000, which will pay the General Fund Debt in less than five years. A decrease in the canal revenues to any probable de. gree cannot change this result, the contribution to the General Fund Debt Sinking Fund being first in the order of priority after the payment of the canal debt of 1846. Should the surplus revenues therefore not fall below $1,500,000, it is hardly questionable that the General Fund Debt Sinking Fund will have accomplished the object for which it was created on or before the 30th of September, 1873.

Of the outstanding stocks chargeable on the General Fund Debt Sinking Fund, $500,000 are now due, and the further sum of $442,961.05 will mature on the first day of May next. The balance in the treasury to the credit of the Fund, on the 30th of September, 1867, was $658,298.55, and there has been a subsequent payment from the canal revenues of $350,000. These sums are applicable to the redemption of the maturing stocks, leaving a deficiency which may be stated approximately at $200,000, to be provided for by a temporary advance from the treasury, or by a deficiency loan made on the credit of the Sinking Fund. The increase in the contribution from the canal revenues to $1,500,000 which may be anticipated in 1869, will enable the Sinking Fund to meet the remaining portion of the debt as it falls due, and repay all advances from the treasury or cther sources. It is a favorable circumstance that a large proportion of the General Fund Debt is payable at the pleasure of the State. Its extinguishment can, therefore, go or as fast as the condition of the Sinking Fund will admit of it, thus avoiding the loss of interest incurred in retaining large balances unapplied, and the difficulty which is often experienced of investing them advantageously in anticipation of the maturing of the obligations for which they are pledged.

The following table gives the several amounts chargeable on the

General Fund Debt Sinking Fund, to Oct. 1st, 1868, and the means applicable to their payment, the interest in favor of and against the fund being estimated :

On the 30th of September, 1867, the outstanding stocks and bonds representing this indebtedness amounted to $26,862,000, classified as follows:

The reduction represents the amount purchased for the Bounty Debt Sinking Fund to September 30, 1867, and canceled.

The Bounty debt had reached its culminating point on the 30th of September, 1866, since which time the claims for reimbursement presented to the Paymaster-General, and audited by that officer under the acts of 1865, have been paid in cash. It is believed that all valid claims under these acts have been adjusted, and that no further advances will be required. With a Sinking Fund annually replenished to the amount of nearly $4,000,000, the payment of the debt must proceed with great rapidity, and it must be extinguished in 1877, unless extended with the consent of the holders. The propriety of such an arrangement, if practicable, rests on the consideration that the local debts incurred by counties and towns for war purposes, are being reduced annually at a rate which, of itself, constitutes a heavy burthen on the tax

payer, and in addition there are the taxes levied by the United States, and graduated on a policy which would impose on the present generation, in addition to the burthen of carrying on a long and exhausting war, the payment of the debt contracted during its progress. If the payment of the Bounty Debt, constituting more than one-half of the State indebtedness, could be distributed over a longer period of years, it would be an essential relief to the productive interests of the State, enabling the Legislature to reduce the annual tax to replenish the Sinking Fund nearly one-half, and the local authorities to persevere in their efforts to clear off the obligations of towns and counties.

BOUNTY DEBT SINKING FUND.

The following table gives the receipts and payments on account of this Fund, for the fiscal year ending 30th of September, 1867:

Received, viz:

Proceeds of 2 mill tax levied in 1866, in pursuance of chapter 325, Laws

Since the close of the fiscal year there have been further purchases of the Bounty Debt stock to the amount of $258,000 which has been paid out of the balance to the credit of the Sinking Fund at that date, the remainder being applicable to the payment of interest. The tax of two and one-eighth mills imposed in 1866, produced the sum of $3,188,785.72, which was less by $765,125.94, than the annual sum required to pay the interest and principal of the debt within the time required by law. This deficiency was provided for in the tax of three mills imposed for the fiscal year commencing October 1st, 1867. The tax required for the fiscal year commencing October 1st, 1868, will be 21 mills.

The purchases for the Bounty Debt Sinking Fund have been thus far confined exclusively to the Bounty Debt Stock, and so long as it can be purchased at fair rates, this disposition of the Sinking Fund moneys should be adhered to. Stock redeemed and